Exploring the Relationship between Effective Tax Rate and Corporate Governance in Quoted Service Companies in Nigeria

Abstract

The study examined the effect of corporate governance on effective tax rates of quoted service companies in Nigeria. Based on Ex-post facto research design, panel data set was collected from twenty four (24) quoted service companies within an eight year period spanning from 2011 to 2018 financial year. Five hypotheses were formulated with the dependent variable as tax effective rate and the independent variables as board size, board gender diversity, board independence, ownership structure and quality of external audit. Ordinary least square regression technique was used to analyze the data. The results revealed that board size and quality of external audit had negative significant effects on effective tax rates during the period under investigation while the
other explanatory variables (board gender diversity, board independence and ownership structure) were not statistically significant. In the light of the result obtained, we advocate among others that if the goal of corporate owners is minimization of tax liabilities, then more should be done to engage the services of big four audit firms not minding the cost.